What is the total cost of ownership of regulatory reporting?

This post was written by Philip Stinson, a London-based analyst in Axioma's Reporting Solutions team. He is primarily responsible for completing periodic filings and servicing clients globally.

The cost of regulatory reporting has skyrocketed in recent years, outpacing the speed by which new regulation is enacted across the US and Europe. Firms are under greater pressure to produce complex analytical reports in increasingly shorter timeframes. The upside is more transparency and regulatory standardisation; but at what cost? Accurate and timely reporting requires holistic solutions able to interpret complex data from a wide range of sources and consolidate it in an accurate manner. Below is a synopsis of various regulatory reporting options and their respective costs of ownership:

In-house solutions

The scale of a DIY, in-house regulatory reporting solution may be justifiable for large asset managers or third-party administrators who can leverage their own technology teams to effectively build out a solution themselves. Over time, however, these in-house or “point” solutions become dated and cumbersome to maintain and update, dragging down the reporting workflow.

At the same time, regulatory bodies are demanding more granular detail and data, straining cross-departmental teams who often work separately and keep disjointed records. A lack of coordination internally makes it extremely difficult for in-house solutions to produce accurate reporting (fragmented data in, incomplete reporting out). Additionally, because in-house solutions were typically built before the full scale of cloud was accepted in the financial industry, relatively poor data storage infrastructure is a common challenge.

Consultancy & Fund Administrators

The perceived reassurance provided by a fund administrator or consultancy firm can mask significant costs that should be seriously evaluated. While a consultative approach might sound like an ideal, hands-off solution to regulatory reporting, the opaque nature of the process often results in man hour wastage, which inflates total cost.

Consultancy firms tend to rely on manual information processing and/or light versions of third-party technology embedded within their own reporting methodology, which adds a layer of service cost. Consultancy firms and fund admins lacking sufficient technology tools tend to rely on Excel verification analytics, a manual and not-always-accurate technique. For this reason, standardisation is key for these players. Client specifications generally fall by the wayside as processes are ill-equipped to handle variation.

Fund admins and consultancy firms address an enormous volume of reporting demand but when it comes to complications, special cases, and advanced reporting, costs can escalate quickly and steeply.

RegTech

Harnessing the power, scale and cost-effectiveness of cloud computing, RegTech providers propose a technology-led, customer-centric alternative to traditional regulatory reporting that provides clients more control and engagement at a lower price point. RegTech solutions are generally one-stop, SaaS-based platforms that enable clients to upload, cleanse, reconcile, and validate their reports in a single place. Many vendors also work in collaboration with regulatory bodies and facilitate report submission directly from their platform.

Managed services solutions from RegTech vendors further reduce operational burden for compliance departments by combining technology, calculation engines, data aggregation capabilities, report compilation with expert advice. A step further, the veritable ‘sweet spot’ for firms is a RegTech provider with joined up regulatory reporting and risk management solution able to seamlessly and accurately pull through risk data into reporting. This is and will become increasingly more important as regulatory bodies continue to intensify scrutiny of risk management.

Axioma Reporting Solutions reduces time spent consolidating and preparing data so that clients are able to pay more attention to reviewing and submitting reports. Unlike other RegTech platforms, Axioma is able to integrate the powerful Axioma Risk engine to support risk calculations, ensuring that a firm’s view and reporting of risk is consistent from front to back. On top of a powerful technology offering, the Axioma Reporting Solutions managed service takes pain out of clients’ hands in the form of a completely outsourced regulatory reporting service, driven by experienced and knowledgeable regulatory experts.

Hundreds of firms continue to turn to Axioma Reporting Solutions for their regulatory reporting requirements. The speed, scale, and cost-efficiency afforded by Axioma’s RegTech platform and calculation engine in combination with industry-leading expertise in both reporting and risk management provide the market’s only single software offering to address any regulatory query or regulation in any region at any time.

To learn more about Axioma Reporting Solutions, click here. For a hands-on look at your reporting needs, contacts our team of regulatory experts at sales@axioma.com.

Nicola is the London-based Director of Reporting Solutions at Axioma. A Chartered Fellow of the Chartered Securities & Investment Institute and an ex-regulator with 18 years of financial services regulatory experience with an in-depth understanding of US and European regulatory framework. Nicola has provided regulatory consultancy services to the asset servicing / asset management industry and acts as a subject matter ...